If a person borrows $2,000 at 5% annual interest and never makes any payments, how much will the loan balance be after five years?
A) $2,250
B) $2,500
C) $2,255.55
D) $2,552.56

Question

Quizplus · Accepted Answer

The formula to calculate the balance after a period of time is: 
Balance = Principal x (1 + Rate)^Time

Plugging in the values from the problem: 
Balance = $2,000 x (1 + 0.05)^5 
Balance = $2,552.56

Therefore, the loan balance after five years would be $2,552.56, which is closest to answer choice D.

If a Person Borrows $2,000 at 5% Annual Interest and Never